Russian Business News Week 01.12.2008 - 05.12.2008

08.12.2008

Russian Business News Week 01.12.2008 - 05.12.2008

During the past week Russian markets have been mostly mirroring the world markets, fluctuations being caused by global rather than internal situation. 

On Monday world indexes has fallen substantially, with Dow Jones falling by 7.7% and Nasdaq by 8.95%, followed by RTSI falling by 4% and MICEX 7.21%. On Tuesday the markets have seen high volatility with MICEX growing 2.23% while RTSI fell 2.15%, and was closed for an hour during trading. During Wednesday and Thursday MICEX and RTSI have been fluctuating 2-3% both ways in reaction to changes in American and Asian indexes. News regarding record unemployment levels in the USA brought the negative end to the week, with RTSI falling 0.56% and MICEX levelling at 0.17% on Friday.

 Oil prices continue to fall, with Brent Crude Oil futures reaching $ 39.74 per barrel, the lowest point since 2004. Some analytics predict oil prices to fall to $20-30 per barrel in 2009 due to fall in world oil demand as production contracts. Petrol prices in Russia have only fallen by 5%, whilst oil prices have decreased threefold, which contributes to fears of stagflation in 2009. 59% of Russian citizens see inflation as the single most important negative effect of global financial crisis, followed by lower salaries and bonuses (38%) and credit problems (31%).

On the political front, NATO has announced its decision to gradually resume dialogue with Russia on political and economic cooperation. However, NATO representatives have stressed that this move is not a sign of acceptance of Russian policy towards Georgia and it will take a long time to re-establish the relationship. European Union has also renewed talks with Russia on economic co-operation agreement. 

Author:  Anastasia Shadrina